A firm’s cost of equity represents the compensation that the market demands in exchange for owning the asset and bearing the risk of ownership. The traditional formula for the cost of equity is ...

J.B. Maverick is an active trader, commodity futures broker, and stock market analyst 17+ years of experience, in addition to 10+ years of experience as a finance writer and book editor.

The equity section of the balance sheet includes items such as common and preferred shares, retained earnings (profits not distributed as dividends), and additional paid-up capital. Common equity ...